EU LNG import infrastructure underutilised

European Union ’s (EU) declining gas demand has resulted in LNG import terminals being utilised less.

The latest version of the Institute of Energy Economics and Financial Analysis’ (IEEFA) European LNG tracker suggested there may be a growing realisation that Europe’s LNG import infrastructure will become increasingly underutilised, as gas use drops further.

After falling to a 10-year low last year, Europe’s gas consumption shrank by 5.4% year-on-year in the first half of 2024.

This translates into a reduced need for LNG imports, which declined by 20% in Europe and 11% in the EU27 in 1H24. Institute for Energy Economics and Financial Analysis (IEEFA) forecast that Europe’s demand for the fuel will drop by a further 37% by 2030.

LNG import terminals have been impacted, as their average utilisation rate fell from 62.8% in 1H23 to 47.2% in 1H24.

Following Russia’s invasion of Ukraine in 2022 and the subsequent cut in Russian pipeline gas supply, European countries scrambled to build new LNG import terminals. But recent developments suggested this escalation is losing momentum, IEEFA said.

“Europe’s LNG terminal construction spree might be coming to an end, with some countries delaying or cancelling infrastructure. Since the beginning of 2023, new terminals or expansions have been shelved in Albania, Cyprus, Ireland, Latvia, Lithuania and Poland. It is unclear whether three planned terminals in Greece will go ahead,” said Ana Maria Jaller-Makarewicz , IEEFA’s lead Energy Analyst, Europe.

Since the beginning of 2022, Europe has increased its LNG import capacity by 23%, or 58 bill cu m. The countries that have added the most capacity are Germany (16 bill cu m), the Netherlands (13 bill), Türkiye (7.7 bill), Italy (7.5 bill), France (6.5 bill) and Finland (5 bill cu m capacity).

However, despite falling demand, many European countries are still planning to invest in new LNG import infrastructure. By 2030, IEEFA predicted that this could result in three-quarters of the continent’s LNG import capacity being unused.

Russian imports rise

Europe increased its imports of Russian LNG by 11% year-on-year in 1H24. This is despite the EU’s stance on ending its reliance on Russian fossil fuels by 2027.

Russian LNG imports to France rose by 110%, those to Spain were flat and those to Belgium decreased by 16%. These three countries accounted for 87% of Europe’s Russian LNG imports during the period.

In June, the EU agreed to ban Russian LNG from being transhipped at its terminals before being sent to third countries. This ban will come into effect in March, 2025.

Europe had increased its transhipments from Russia’s Yamal LNG terminal by 15% year-on-year in 1H24.

Ukraine’s natural gas transit deal with Russia is due to expire at the end of this year. As Europe’s LNG imports keep decreasing, it is unlikely that the continent’s security of supply will be affected, if this agreement is not extended.

Europe reduced its LNG imports by 18 bill cu m between 1H23 and 1H24. This decrease was more than the 14.6 bill cu m of Russian gas exported to Europe via Ukraine in 2023, IEEFA said.